Analysis of the opportunities for a MNC to expand its international operations on Chinese and Indian markets

Résumé du document

With the biggest two populations of the world, China (1.3 billion inhabitants) and India (1.1 billion inhabitants) became two major participants in the global economy. With the late evolution of their populations, China and India have evolved as the two most important emerging markets and they represent a decisive stake for any MNC looking for geographic expansion in order to expand its international operations. We will try to evaluate the opportunities and the threats, the advantages and the disadvantages of both the markets in order to determine which market is worth entering. To carefully study these two giants, there are a lot of different aspects to take into consideration for any MNC. The following points will enable a MNC to determine the major market opportunities to implement a sustainable growth strategy.

Extraits

[...] III The choice As we saw in the previous parts, both countries are attractive markets for any MNC which wants to expand its international operations. Nevertheless, if we have to make a choice, some aspects of this study would make me prefer the Indian market, more especially if it is an IT company. It is true that the Foreign Direct Investments are largely more important in China but it also means that the competition is higher and that it is now more difficult to set up a company there than before. [...]

[...] Concerning the language, the official language in China is Mandarin, although Cantonese is the language commonly spoken in the southern Chinese province of Guangdong, adjacent to Hong Kong. English is not widely spoken in China, that's why it is necessary to employ one Chinese-speaking staff member if we a company wants to extend its international operations in China. On the other side, the situation is largely better in India. Although Hindi is India's national language, almost all Indian officials, civil servants and business people have an excellent command of English. This aspect is particularly important during the negotiations and it allows to have a fair deal. [...]

[...] All these information depend on the kind of product or service. The solution for a company which wants to extend its international operations on new markets is to contact Export Assistance Centers such as the “Missions Economiques” which will be able to inform you about all the necessary points : Services to locate and evaluate overseas buyers and representatives International trade opportunities abroad Foreign markets for French. products and services Foreign economic statistics Export documentation requirements U.S. export licensing and foreign nation import requirements Export trade financing options International trade exhibitions Export seminars and conferences Regarding the legal environment, the company has to take into consideration all the following points : The company must obtain an import license in order to import the goods on the Chinese or Indian Territory. [...]

[...] Industry ( Increased local authority and permitted wide variety of enterprises. The central government was dominant in two areas: Framework ( Strict Communist control but strong economic influence of non-state organizations and individual citizens. Barriers ( Removed them opening economy to increased foreign trade and investment. The Chinese currency is difficult to change into American Dollar or in Euro Moreover it is also important to underline the fact that a foreign company can not own a company located in China. [...]

[...] Reorganization of the fiscal system ( decrease of the corporation tax and of the insurance tax Reorganization of the public finances ( decrease of the military expending, of aids to public sector and agriculture. We can see that both countries have a policy of market liberalization but the political consequences are very different. India continues to be an open, participatory, multiparty democracy, while China has an authoritarian, one party regime. There is indeed a political and administrative monopoly of the Communist Party in China with an autocratic regime without elections Legal environment The legal issue very important in the success of a company which wants to extend its international operations on new markets. [...]